Real Estate Calculator

How this result is built

Estimate cap rate, net operating income, and cash-on-cash return for a rental property.

Cap rate looks at the building as if you paid cash. Net operating income is rent minus operating costs, and the mortgage is not one of those costs. Dividing that income by the price gives a rate you can compare across properties.

What the opening example is for

Cash-on-cash brings the loan back in. It divides the cash left after debt service by the cash you actually invested. A high cap rate can still produce weak cash flow if the financing is expensive.

The walkthrough below uses the numbers already sitting in Real Estate Calculator. Press Calculate and the headline should match this page. Then put your own figures in. The math does not run until you press the button, and Clear hides the result.

What each field is doing

The “Purchase price” line on Real Estate Calculator starts at $350,000.00. The other fields stay put while you change this one. That is the clean way to see what this line is doing inside the result.

Real Estate Calculator treats “Monthly rent” as its own entry, and the form opens with $2,400.00. If the label is a rate, type the annual figure the contract uses. If it is money, type the amount that will actually move, not a rounded hope.

Before you replace it, “Yearly operating expenses” reads $9,000.00 on Real Estate Calculator. Tax, insurance, repairs, vacancy, and management. Leave out the mortgage. Leave that figure only when it matches the statement, the quote, or the plan you are testing. Press Calculate after the edit so the chart and the schedule move with it.

The remaining fields

Look at “Down payment” first if you are checking Real Estate Calculator: the filled value is $70,000.00. A round example is useful for learning the page. It is a poor substitute for the number on your own paperwork, so replace it and run the form again.

The “Loan rate” line on Real Estate Calculator starts at 7%. The other fields stay put while you change this one. That is the clean way to see what this line is doing inside the result.

Real Estate Calculator treats “Loan term” as its own entry, and the form opens with 30. If the label is a rate, type the annual figure the contract uses. If it is money, type the amount that will actually move, not a rounded hope.

The opening result, line by line

Press Calculate on the opening form and Cap rate is 5.66%. That is the number the rest of this section is talking about.

Net operating income is $19,800.00 when you run the opening figures on Real Estate Calculator. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

On this opening pass, annual debt service is $22,354.16. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

Real Estate Calculator reports that cash flow after debt is -$2,554.16. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

How those lines were produced

Cash-on-cash return is -3.65% when you run the opening figures on Real Estate Calculator. That line is part of the same calculation as the headline. It is not a second balance you can spend on top of the result. Change one input and press Calculate if you want to see whether this line moves.

Cap rate ignores financing. Cash-on-cash includes the loan and the cash you put in.

A second pass changes only “Purchase price”, from $350,000.00 to $385,000.00. Cap rate moves from 5.66% to 5.14%. Nothing else on the form was edited, so the gap between those two results is the effect of that one field on Real Estate Calculator. If the gap is tiny, this page is not very sensitive to that entry. If the gap is large, get that entry from a document before you plan around the result.

What this page will not claim

Real Estate Calculator does not know your credit score, the county’s tax bill, or what an appraiser will say. Type the price, the loan, and the escrow you were quoted. Compare the payment with the loan estimate, and treat a small rounding difference as normal.

Real Estate Calculator stops at its own formula. When the next question is different, open Rental Property Calculator (Cash flow now and equity at the end of the hold.); ROI Calculator (Total ROI and the annualized rate.); Mortgage Calculator (Principal, interest, tax, insurance, PMI, and HOA in one payment.). Do not add those results to this one as if they were the same kind of dollar.

Check the result before you use it

Start on Real Estate Calculator by reading the labels, not the headline. The opening labels are Purchase price ($350,000.00), Monthly rent ($2,400.00), Yearly operating expenses ($9,000.00), Down payment ($70,000.00), Loan rate (7%), Loan term (30). If a label is not the fact you have, the result cannot turn into that fact later. The illustration on the form lands on 5.66%. When you press Calculate and see that same figure, the button and this explanation are using one formula.

Change one field at a time. Write down the headline, edit a single line, and press Calculate again. A large jump means that line carries the result. A line that does not move is a line the formula ignores, which is a reason to confirm you opened the right page. Real Estate Calculator is built for one job: Cap rate and cash-on-cash from rent and expenses. The description on the page says the same thing in a sentence: Estimate cap rate, net operating income, and cash-on-cash return for a rental property.

When the paperwork disagrees

Then hold the headline next to a source outside the site. That source might be a loan estimate, an account statement, a pay stub, or the public limit named in the methodology. A few cents of difference on a long schedule is ordinary rounding. A different rate, a fee you never typed, or a tax the form does not ask for is not rounding. Correct the input. Do not average the page with the paperwork.

When the outside source still disagrees, Real Estate Calculator has reached the edge of what it will claim. It will not phone a lender, pull a county record, or apply a credit you left blank. Send the calculator name, every input, and the result you expected through the contact page if you think the formula itself is wrong. Until that is settled, read 5.66% as the output of the fields above and nothing else.

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